Orexo (ORX)

Business description

Orexo is a Swedish speciality pharma company, with expertise in drug delivery/reformulation technologies (in particular sublingual formulations) and a US commercial infrastructure for opioid dependence therapy Zubsolv (also filed in Europe). Orexo also has two clinical assets and three preclinical programmes.

Investment summary

Orexo generated positive EBITDA and operating cash flow generation in FY16 and FY17, and have guided for this to continue in FY18. US commercial and public formulary coverage is dynamic but exclusive contracts with Humana, among other insurers, are having a positive impact on US Zubsolv volumes and sales. The IP infringement appeal on the US Zubsolv IP was resolved in Orexo's favor and Zubsolv generics are precluded before September 2032. Other patent cases against Actavis are ongoing. The EMA has approved Zubsolv for Europe, and partner Mundipharma launched in Q218 with the SEK30.6m milestone now in our model. EU Zubsolv royalties are expected to start materially in Q418. Orexo's focus now shifts to business development, M&A and sales force leverage.

Last updated on 12/11/2018

Industry outlook

Opioid dependence diagnosis/treatment rates are low due to social stigma, limited access to therapy in parts of the US and affordability. Competition includes Suboxone film (Indivior), Bunavail (BDSI) and six generic bup/nal tablets.